In prow ipi-install-install step[1], function inject_promtail_service will be performed and update bootstrap ignition file on azure platform.

After this update, bootstrap ignition data is base64 encoded and gzip compressed.
-------------
{"ignition":{"config":{"merge":[{"compression":"gzip","source":"data:;base64,H4sIAAAAAAAC/9S925eiyPYn
...

When creating cluster with userProvisionedDNS enabled, installer edited bootstrap ignition file, but failed to update API and API-Int Load Balancer IPs to infrastructure manifest, I downloaded the bootstrap ignition file and checked the content of /opt/openshift/manifests/cluster-infrastructure-02-config.yml, there is no api and api-int IP information.
-------------
apiVersion: config.openshift.io/v1
kind: Infrastructure
metadata:
  creationTimestamp: null
  name: cluster
spec:
  cloudConfig:
    key: config
    name: cloud-provider-config
  platformSpec:
    type: Azure
status:
  apiServerInternalURI: https://api-int.ci-op-grjnv3rb-92d0c.qe1.devcluster.openshift.com:6443
  apiServerURL: https://api.ci-op-grjnv3rb-92d0c.qe1.devcluster.openshift.com:6443
  controlPlaneTopology: HighlyAvailable
  cpuPartitioning: None
  etcdDiscoveryDomain: ""
  infrastructureName: ci-op-grjnv3rb-92d0c-z49rb
  infrastructureTopology: HighlyAvailable
  platform: Azure
  platformStatus:
    azure:
      cloudLoadBalancerConfig:
        dnsType: ClusterHosted
      cloudName: AzurePublicCloud
      networkResourceGroupName: ci-op-grjnv3rb-92d0c-z49rb-rg
      resourceGroupName: ci-op-grjnv3rb-92d0c-z49rb-rg
      resourceTags:
      - key: expiration_date
        value: 2025-11-13T11:09+00:00
    type: Azure

However, installer continued and didn't exit with error, see
.openshift-install.log, and failed finally during waiting for machine provision because static pod coredns could not be up in bootstrap host.
-------------
time="2025-11-13T03:33:53Z" level=debug msg="BlobIgnitionContainer.ID=/subscriptions/53b8f551-f0fc-4bea-8cba-6d1fefd54c8a/resourceGroups/ci-op-grjnv3rb-92d0c-z49rb-rg/providers/Microsoft.Storage/storageAccounts/ciopgrjnv3rb92d0cz49rbsa/blobServices/default/containers/ignition"
time="2025-11-13T03:33:53Z" level=debug msg="Azure: Editing Ignition files to start in-cluster DNS when UserProvisionedDNS is enabled"
time="2025-11-13T03:33:53Z" level=debug msg="Azure: Editing Ignition files with API LB IP: 135.119.24.174 and API Int LB IP: 10.0.0.100"
time="2025-11-13T03:33:53Z" level=debug msg="Successfully added API and API-Int Load Balancer IPs to infrastructure manifest"
time="2025-11-13T03:33:53Z" level=debug msg="Successfully added API and API-Int Load Balancer IPs to lbConfig configmap"
time="2025-11-13T03:33:53Z" level=debug msg="Successfully updated bootstrap machine-config-server certs"
time="2025-11-13T03:33:53Z" level=debug msg="Successfully updated master pointer ignition with API LB IP"
time="2025-11-13T03:33:53Z" level=debug msg="Successfully updated worker pointer ignition with API LB IP"
time="2025-11-13T03:33:53Z" level=debug msg="Successfully updated master user data secret"
time="2025-11-13T03:33:53Z" level=debug msg="Successfully updated worker user data secret"
time="2025-11-13T03:33:53Z" level=debug msg="Successfully updated bootstrap ignition with updated manifests"

[1] https://github.com/openshift/release/blob/master/ci-operator/step-registry/ipi/install/install/ipi-install-install-commands.sh#L785-L800  

    4.21 pre-merge test

    Always in prow because env OPENSHIFT_INSTALL_PROMTAIL_ON_BOOTSTRAP is set to true on azure by default.

    1. Install cluster by using ipi-install-install step in prow
    2.
    3.
    

    Installation failed to provision control plane machines

    For such decoded and compressed ignition file, installer either handles this file correctly and updates api/api-int IPs in infra manifest or exits with error when updating failed.

1. prow ci failed job: https://qe-private-deck-ci.apps.ci.l2s4.p1.openshiftapps.com/view/gs/qe-private-deck/pr-logs/pull/openshift_release/71237/rehearse-71237-periodic-ci-openshift-verification-tests-main-installer-rehearse-4.21-installer-rehearse-azure/1988804477716533248

2. Installation with userProvisionedDNS enabled is successful when not running function inject_promtail_service